Daily Morning Report 20/11/2012 | Forex Trading Analysis

The dollar strengthened against the world's major global currencies on Tuesday after Moody's stripped France of its triple-A rating, which wiped out appetite for risk.

Moody's Investors Service earlier said it had cut French sovereign ratings to Aaa1 from Aaa, which sent investors ditching the EUR/USD and commodities to digest the news, which made the dollar the perfect safe haven.

As Moody’s published earlier, “France's long-term economic growth outlook is negatively affected by multiple structural challenges, including its gradual, sustained loss of competitiveness and the long-standing rigidities of its labour, goods and service markets.” Furthermore,  “France's fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand, and in the longer term due to the structural rigidities noted above.”

The market kept an eye on the Bank of Japan, which was holding a monetary policy meeting later Tuesday.

The Bank of Japan may hold benchmark interest rates unchanged, though upcoming elections could see opposition leader Shinzo Abe become the next Prime Minister. Abe has called for more aggressive policy action and stimulus from the Bank of Japan.

In other news, foreign direct investment in China fell for the 11th time in 12 months as labour costs rose, a slowdown threatened to drag growth to a 13-year low and a territorial dispute with Japan weighed on trade.

Later Tuesday, the U.S. is to publish official data on building permits as well as data on housing starts, while, the U.S. Fed Chairman is due to deliver a speech titled "The Economic Recovery and Economic Policy" at the Economic Club of New York. Finally today, the Eurozone of finance ministers will hold talks in Brussels to discuss financial issues in the bloc.

Daily Afternoon Report 19/11/2012 | Forex Trading Analysis

  The U.S. dollar was lower against the other major currencies on Monday, as optimism over signs of progress in resolving the U.S. fiscal cliff and hopes that Greece will soon receive its next aid installment dampened demand for the greenback. Traders were looking ahead of a meeting of the eurogroup of euro zone finance ministers on Tuesday to discuss whether Greece will receive its next tranche of financial aid. A decision on unlocking Greece’s next bailout aid has been delayed by disagreements between officials from the International Monetary Fund and Europe on how best to reduce the country’s debt to manageable levels. Concerns over the economic outlook for the euro zone persisted after Germany's central bank warned earlier that economic growth in the bloc’s largest economy is weakening as a result of the crisis in the region, as well as problems in the global economy.

  On Monday, the National Association of Realtors said that U.S. existing home sales rose by 2.1% to a seasonally adjusted 4.79 million units in October from September’s revised total of 4.69 million. September existing home sales were initially reported at 4.75 million units. Analysts had expected U.S. existing home sales to rise to 4.75 million units in October.

Daily Morning Report 19/11/2012

The dollar weakened against the world's major global currencies on Monday on budding hopes U.S. policymakers will steer the economy away from a fast-approaching fiscal cliff. If untreated, the fiscal cliff could siphon over USD600 billion out of the U.S. economy next year alone in the form of rising taxes and cuts to government spending.

Last Friday, Democratic and Republican congressional leaders met with President Barack Obama earlier to discuss ways to avoid the cliff, and both sides emerged afterwards expressing optimism for a deal, which continued to draw investors out of the safe-harbor dollar on Monday.

In other news, the euro traded steady to higher against the dollar on Monday as investors went long ahead of a Tuesday meeting of Eurozone finance ministers that could lead to fresh bailout money flowing into Greek coffers.

On Tuesday, Eurozone finance ministers will meet to discuss unlocking Greece’s next tranche of aid. Expectations that European Union policymakers and the International Monetary Fund will disburse aid to crisis-weary Athens began to build early in the session and stoked demand for higher-yielding currencies, which came at the dollar's expense.

In latest news, as released by Rightmove House Price Index, “This month sees a drop of 2.6% (-£6,407) in the asking prices of properties coming to market, following the now familiar post-credit-crunch pattern of falls in November. However, this is the least severe November fall since 2009 and still leaves prices 2% (+£4,617) ahead of where they were this time last year – the highest annual rate of increase achieved in November for five years”.

Later Monday, the U.S. is to release industry data on existing home sales, a leading indicator of economic health.

Daily Afternoon Report 16/11/2012 | Forex Trading Analysis

The U.S. dollar was broadly higher against the other major currencies on Friday, as markets were jittery ahead of highly anticipated talks between U.S. President Barack Obama and Republican lawmakers on how to tackle the "fiscal cliff", while euro zone debt concerns remained.

The EUR/USD came under pressure after the European Central Bank said in a report that the euro zone's current account surplus narrowed more-than-expected in August, declining to EUR0.8 billion from an upwardly revised EUR10.9 billion the previous month,

Earlier this morning, Bundesbank’s Weidmann said that a banking union itself can be stabilizing, yet a banking union as a solution to the crisis is wrong. Weidmann also cautioned against an over-hasty banking union.

Also this morning, Swiss National Bank’s Thomas Jordan said that the central bank will continue to apply the Franc ceiling, as a stronger currency hurts the local Swiss economy. He also said that the SNB’s FX reserves expose the bank to substantial FX risk.

Meanwhile, investors remained concerned over the looming "fiscal cliff" in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.

There are fears the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise before then.

In latest news, the industrial production in the U.S. has declined in October as superstorm Sandy knocked out power in the Northeast. Output at factories, mines and utilities dropped 0.4 percent last month after a revised 0.2 percent increase in September that was smaller than previously estimated, Federal Reserve data showed today in Washington.

Furthermore, foreign investment in Canadian securities advanced to $13.9 billion in September on the strength of purchases of government bonds and corporate equities. Canadian investment in foreign securities reached a six-month high of $6.0 billion, led by the acquisition of US equities. Foreign investment in Canadian debt securities focuses on government bonds Foreign investors acquired $10.6 billion of Canadian debt securities in September, the largest such investment since May.

Daily Afternoon Report 15/11/2012 | Forex Trading Analysis

The U.S. dollar trimmed losses against the other major currencies on Thursday, after official data showed the number of people who filed for unemployment assistance in the U.S. last week surged to the highest level since April 2011.

As the U.S. Department of Labor said, the number of individuals filing for initial jobless benefits in the week ending November 10 rose by 78,000 to a seasonally adjusted 439,000, compared to expectations for an increase of 14,000 to 375,000.

Whereas, the euro held gains against the U.S. dollar on Thursday, after the release of mixed U.S. economic data, although concerns over the euro zone debt crisis and U.S. fiscal policy remained.

In the euro zone, official data released earlier showed that the region’s economy shrank 0.1% in the third quarter, following a contraction of 0.2% in the preceding quarter.

Year-on-year, euro zone gross domestic product fell 0.6% compared to a year earlier after contracting at a rate of 0.5% in the previous quarter.

Data also showed that Spain's economy contracted by 0.3%, while Italy’s economy shrank 0.2% in the third quarter.

Furthermore, concerns over the health of triple-AAA Austria and the Netherlands intensified after data showed Austria’s economy shrank 0.1% in the three months to September, while the Dutch economy contracted by an alarming 1.1%. Economists had only expected a decline of 0.2%.

A separate report showed that consumer price inflation in the euro zone held steady at 2.5% in October, unchanged from an initial estimate and in line with expectations.

Core CPI, which excludes food, energy, alcohol, and tobacco costs held steady at 1.5%, unchanged from a preliminary estimate and matching forecasts.

In other news, the pound came under pressure after official data showed that retail sales in the U.K. fell by a seasonally adjusted 0.8% in October, compared to expectations for a 0.1% fall.

The yen also came under selling pressure after Shinzo Abe, the head of Japan's main opposition party and frontrunner in next month's election, called for aggressive monetary easing by the Bank of Japan to support growth.

In latest news, the Federal Reserve Bank of Philadelphia’s general economic index decreased to minus 10.7 in November from 5.7 a month earlier. A reading of zero is the dividing line between expansion and contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware.

Later in the day, the speech by Federal Reserve Chairman Ben Bernanke is to be closely watched for any indications on the future possible direction of monetary policy.